Who wins, who loses? A look at issues facing retirees

By William H. Stewart
Economist

First of two parts

A retired friend offered the following advice. “Talk to everyone you know with influence to stop the privatization of the CNMI Retirement Fund’s medical and health plan. Alert relatives, friends, senators and representatives and ask for their help to keep privatization from happening.”

Members must realize that because the Fund wants to abandon the responsibility of health care coverage by transferring the program to a private firm, there must be a reason. That reason is the high cost of providing coverage to retirees and government workers. Just imagine the “selection out” process that any private firm offering a new health coverage plan will apply to many retirees with pre-existing health problems or advanced age and the high cost imposed on others that the private firm considers to be of low enough risk to offer coverage.

The Retirement Integrity Assurance Act, P.L. 13-60, Section 8, Actuarial Study Mandate provided that the board of trustees of the Retirement Fund shall commission an actuarial study, which among other things, would review the entire government retirement system and recommend appropriate statutory changes that would significantly lower the government’s contribution rate over time.

Recently there have been several published comments by an official of the Retirement Fund that have caused me to think about the current serious situation facing all the members. This concern is over the very real possibility that should the Fund’s medical and health program be privatized, many retirees and their families, together with most existing government employees, will either not be able to afford the high cost of “privatized” health care coverage to the extent needed by themselves and their families—and, as a result, may be forced to go without health care coverage. Or, as an alternative, they may elect to join a private plan and pay much higher premiums than they now pay (perhaps $400 to $500 a month) and have less disposable income available for other family needs. In other words, those who do join will be “poorer” as a result of the more costly association. This assumes, of course, that they are sufficiently healthy and do not represent a “liability” to the private company and are accepted into the private program. Many retirees with pre-existing illnesses—some of which are listed below—will not be able to obtain medical and health coverage at any price. They will be victims of the company’s policy, which, when translated into simple terms, means “there are some people the insurance company just can’t afford to have on their books because their care will cost more than they contribute in premium payments.” If that appears callous—it is—that’s the way it will be for many retirees with pre-existing or incipient illnesses when dealing with a “profit-motivated” private company.

Friends, your mother may love you but the insurance company will not. Many people have worked for the government for years, some at low wages and considered the medical and health program within their retirement package as part of their employment agreement with the government. They considered the program as a form of deferred compensation along with an implied promise that, if one worked for the government and paid into the retirement program, it would be there when their working years are over. Now they find the very real possibility that they won’t have the program they thought they had because the government wants to change the original employment covenant.

If you have diabetes, high blood pressure, a heart condition, ulcers, tuberculosis, epilepsy, emphysema, kidney problems, cancer, high cholesterol, LDL, glaucoma, HIV, Lupus Vulgaris, Lytigo and Bodig, Alzheimer’s, Parkinson, Hansen or one of the numerous other illnesses, you probably won’t be able to purchase medical insurance to cover your existing condition at a cost you can afford. Has the government told you that or will the bad news be left to the insurance companies to tell you? Seems to me there might be a whole lot of people in that group. Just make certain that your illnesses are confined to only a common head cold. Then you’ll be alright.

With respect to the ineligibility of medical coverage for, say, a prostrate condition, which is quite common among men of retirement age, I’m curious as to whether this condition would be among a private firm’s medical and health classification of SAT (sorry about that)—no coverage for you.

Even if you or your dependents are fortunate enough to avoid any one of the medical conditions listed above—even if you are lucky enough to avoid the ravenous vultures of the air, those unseen debilitating viruses and bacteria—time still has a way of taking its toll on one’s health. It’s nature’s way to break us down and it happens to everyone sooner or later.

To be continued.